How to Start a Franchise, Part 3: Choosing the Right Location

July 6, 2017

Location, location, location! Undoubtedly, you’ve heard this said before when it comes to investing in real estate. Getting a return on your investment requires putting a good amount of time and energy into finding just the right location that will attract the most attention. The same is definitely true when it comes to choosing a franchise location. In fact, you could say that it is crucial to getting a business off the ground. For this reason, finding a location will join acquiring funding and putting together a business plan as an important piece in our series on learning how to start a franchise.

Where to Begin

If you have never operated your own franchise before, that’s okay. Oftentimes, profitable franchises are started by driven people who are completely new to the industry. With the franchise business model, there is usually a plethora of information and resources right at your fingertips, and this includes the process of searching for a location.

The best franchises come with guidance from a franchisor. For this reason, make sure to reference your franchise agreement. Learning how to start a franchise without this document will not work. The franchise agreement can contain several items that will dictate how you go about scouting out a location:

Location size/area

Location type

Location cost

The type of neighboring tenants you can have

The traffic patterns of the potential area

Protected areas and territory (i.e. stipulation that no other franchisee will “invade” the area)

Once you understand what is expected of you location-wise, it’s time to start your search.

Scouting Out a Location

Another part of figuring out how to start a franchise is hitting the pavement and surveying locations. Make sure to look beyond the physical building or center and consider the totality of the area. You should do some research on the demographic makeup. Also, find out what the traffic patterns are like to see how difficult accessibility might be. Moreover, check to see if there is any new construction planned. You don’t want to find out that a competitor is moving in next door. Once you have your list of prospective locations, your franchisor and their real estate team may then travel out and look at each site with you.

Negotiating the Lease

Once you’ve found the perfect location, it’s now time to get down to the nitty-gritty of the lease. This is where you might need a good amount of help from people who know how to start a franchise. Your franchisor and their real estate team have a lot of experience with leases and profitable franchises. They may be able to help you identify possible financial aid available from the landlord. This can be in the form of a month of free rent or allowances for making tenant improvements to the building.

Additionally, pay attention to rent clauses that stipulate what costs you’d be responsible for. For example, costs associated with common grounds maintenance, taxes, or landlord insurance. Furthermore, there may be a clause triggering a rent increase as your business grows. Again, your franchisor and real estate team understand how to start a franchise and may be able to help you identify these issues and decipher if they are reasonable and negotiable. In fact, they may even have a standard lease document for you to take back to your landlord.

Finalize the Lease

Once everything seems to be in order, you should consider enlisting the help of a lease attorney. This will most likely be your responsibility, but your franchisor might have some resources that will assist both you and the attorney in the process. This might be in the form of suggestions on what language can be used to strengthen the lease in your favor. In any event, it is just a good idea to have a well-trusted, well-experienced lease attorney in your corner.

Best in Class Education Center franchisees benefit from a franchisor who has extensive experience in the industry. If you’re wondering where the knowledge of how to start a franchise comes from, just remember that for over twenty years, CEO Hao Lam has been launching and operating profitable franchises. Hao and his team work closely with franchisees and guide them through the process of finding a great location. This includes providing assistance in looking at locations, compiling demographic reports, doing site drawings, and reviewing letters of intent.

This process has worked remarkably well - the team has successfully facilitated the opening of 48 locations across 9 states. Of course, it’s worth mentioning that location assistance is not the only support Best in Class provides. There are other franchisee benefits including training, technology, marketing help, and the use of proprietary curriculum.